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Instagram is hoping the photo-sharing service's new tagging feature called "Photos of You" appeals to businesses by allowing users to tag posts with brand names, the company said in a blog post. This new ability for fans to tag brands in photos of products is more than just free word-of-mouth marketing, writes Chris Gayomali. The tags also allow businesses to see who is buying their products, where they're being used and what sort of feedback the posts get from followers.

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Nearly all fashion and beauty brands are taking advantage of marketing on Instagram, with 98% of fashion brands and 95% of beauty brands using the photo-sharing site, according to a report from L2. It also found that fashion brands have increased followers by 27%, and beauty brands have seen a 30% increase. The growth is due in part to Instagram's improvements to its sponsored ads that include capabilities for direct sales and sign-ups, according to Eleanor Powers, L2's insight director.

Celebrity PR teams are increasingly using photo-sharing service Instagram to handle crises. The "pseudo-intimate" nature of a shared photo, and the potential for images to go viral, makes the service well-suited to brand management, writes Maureen O'Connor. "It feels more genuine than a press release, but still allows for meticulous image control," she writes.

The outcry following Instagram's Dec. 17 announcement of changes to its privacy policy quickly led the company to reverse its decision -- but it also generated positive buzz for a number of newer photo-sharing applications that offer alternatives to Instagram. Pheed, a six-week-old application that lets users charge followers to see their photo posts, climbed Apple's download chart, becoming the ninth most downloaded app in the U.S. last Thursday. Meanwhile, daily signups for the Berlin-based photo-sharing app EyeEm increased by more than 1,000% last week, according to founder Florian Meissner.

Facebook's Instagram and Twitter are battling each other in the photo-sharing social space and competing for mobile-advertising dollars. Facebook recently disabled an Instagram feature making it easy to post via Twitter, and Instagram's daily active usage now surpasses Twitter. Instagram executives say the company will eventually offer the equivalent of Twitter's "promoted tweets" paid ads.

Photo-sharing service Instagram is concentrating on extending its impressive growth and establishing itself as the premier service of its kind but is also exploring ways to make money. One possibility, says CEO Kevin Systrom, is charging for premium features. And another is subscriptions to brands' photo-sharing accounts.